Choosing a credit score solution can be a daunting task. Understanding what credit scores are in the first place can be difficult enough! When you apply for credit, lenders want to know what sort of risk they are taking if they loan money to you. Whether you are applying for a credit card, car loan, or mortgage, determining whether you are “credit worthy” is the basis of all applications.
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Most lenders use something called a “FICO score” to determine your credit risk. FICO scores are provided from three major bureaus:
Equifax
Experian
TransUnion
The scores provided by these bureaus are determined by information they keep on file about you. This information is typically submitted by those with whom you do business. A few examples of those who provide information to credit bureaus include banks, mortgage companies, and landlords. Such information can include credit histories, debts owed, and judgements.
As the data on file changes, so does your credit score. Many lenders will retrieve your FICO score from all three bureaus, as each one may have information the others do not provide. All three FICO scores can affect how much you can borrow, your loan’s interest rate, and any other terms lenders will offer you. Although higher scores typically mean a borrower is a lower risk, there is no score that can explicitly determine whether a particular borrower will be a good or bad risk for the lender.
It is wrong to assume there is only one credit score give to you when someone talks about your current FICO score, as there is no one all-encompassing credit score used by lenders to make decisions about a borrower. Many lenders may use their own credit scores in addition or in lieu of credit bureau scores. Some lenders may choose to use credit scores other than FICO-based ones. A lender’s view of your credit score may differ depending on what source or sources they choose to use. Lastly, a borrower’s credit score changes over time, so as data changes at one credit reporting agency, so will the credit score.
Confused yet? This is only the beginning. Let us help. Our trained professionals here at CardCredit.Net know the ins and outs of credit scores and how to choose the best solution for you.